The USDA will make sure you follow the rules if you are a rural homeowner. If you are late or have stopped making payments to them, unlike a private lender, the USDA does not need a courts approval before it comes after you to pay off your debt. The rules simply don't apply the same to this government agency. They have the power to garnish your wages including government benefits, take home pay, social security and tax refunds.
Due to current federal regulations the USDA can garnish up to fifteen percent of Social Security payments as well as up to 15 percent of the homeowner's pay that they take home. You may be hit with stiff penalties up to 28% or more added on to collection costs. The USDA if legally allowed can pursue any unpaid balances once a foreclosure has been completed. This is even possible in the states that have limited these actions from any type of private financial institution.
There are many critics these days that dislike the way this arrangement has been set up and are unhappy about the agency's collection practices. The USDA currently lends out to various low and moderately low income homeowners that are located in the areas that have been hit hard by poverty and the current recession that our nation has been faced with. It has been said that the USDA is currently 'pulling blood out of a stone' by enforcing the practices that they are currently involved in.
Some other advocates have also said that the U.S. USDA's standards are ridgid, they cannot bend the rules like a private farm lender could. If you wish to make modifications to your mortgage, you had better go with a private lender. Restrictions are a plenty when it comes to working with the USDA on your home loan.
If you are able to get a direct loan you may be given a break from loan payments, within the limits set forth by the lending institution. This may result in you paying more in the long run, or making higher payments due to the unpaid balance being added to the current balance due. This could leave some in a sticky situation!.
The US Department of Agriculture has stated recently that the collection process that it practices is legally required under the Federal Debt Collection Improvement Act of 1996. This act is in response to all of the charges that were put into place by the regulators since current rules were considered to be too lenient on borrowers who are delinquent with their payments.
So if you are looking into buying a home or refinancing your current mortgage, it may be in your best interest to look into all of the options that you have available when it comes to low interest deals and government approved loans. Refinance rates are currently at an all time low, anywhere from 4% to 5% in most cases for many home owners. Therefore you have plenty of options when it comes to getting the very best deal on refinancing rates when it comes to your home's current mortgage.
Copyright (c) 2012 Farm Credit Services of Mid-America
Darren Lynn blogs for Farm Credit Services of Mid-America (FCS) a cooperative serving farmers in IN, OH, KY and TN. We Provide farm loans and equipment loans as well as financial services like crop insurance and leases. Find out about land financing today.